Satara faces loss after review finds double counting

Feb. 4 (BusinessDesk) - Satara
Cooperative Group, the Te Puke-based kiwifruit and avocado
company, may post a full-year loss before tax after an asset
revaluation review found it had double-counted its cool
stores.

The company would reduce the value of land,
buildings and plant by $5 million to $33.4 million if it
takes all the adjustments in the 2012 year, it said in a
statement today.

That would turn its pretax earnings to a
loss of $2.1 million from a projected profit of $600,000,
resulting in a $2.4 million reduction to its asset valuation
reserve and reduce deferred tax liabilities by $500,000, it
said.

The company’s shares last traded at 40 cents on
the NZX and have shed a third of their value in the past two
years. Chairman Hendrik Pieters said shareholders should
hold off on trading the shares on the news because the
company was separately in the final stages of talks over a
material transaction that will be announced in the next few
days.

Satara flagged the asset revaluation in its
first-half results, having cut the value of assets the
previous year in the wake of the devastation wreaked by
Pseudomonas syringae pv. actinidiae (Psa) on the kiwifruit
industry. The financial impact of the disease on the
kiwifruit industry was estimated at between $310 and $410
million over the next five years by a Lincoln University
study last year.

The company says that based on
preliminary valuation advice, industry-wide and company
specific factors would cut the value of its land and
buildings by $2.3 million in the latest year. The effect of
counting the value of “certain items of coolstore plant”
in both land and buildings and plant and equipment in its
accounts was to overstate their value in 2012 by $2.7
million, it said.

Satara said it will release more details
of the adjustments with its full-year results.

The Wellington-based BusinessDesk team led by former Bloomberg Asian top editor Jonathan Underhill and Qantas Award-winning journalist and commentator Pattrick Smellie provides a daily news feed for a serious business audience.

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